Transcript Second thoughts on globalisation - Lowy Institute

Second thoughts on globalisation
Mark Thirlwell
4 April 2007
Globalisation: good for growth . . .
World real GDP growth
% change on previous year
7
World
Trend 1970-2005
6
5
4
3
2
1
1970
1975
1980
1985
1990
1995
2000
Sources: IMF World Economic Outlook September 2006 database
2005
Globalisation: good for growth . . .
World real GDP growth
% change on previous year
7
World
Trend 1970-2005
6
5
4
3
2
1
1970
1975
1980
1985
1990
1995
2000
Sources: IMF World Economic Outlook September 2006 database
2005
Trend growth has
risen by about one
percentage point
(3.4% - 4.4%)
between 1980 and
2007
. . . good for inflation . . .
World consumer price inflation
Advanced
economies
Developing
countries
% change on previous year
15
10
5
0
1970
1975
1980
1985
1990
1995
2000
Sources: IMF World Economic Outlook September 2006 database
2005
. . . good for inflation . . .
World consumer price inflation
Advanced
economies
Developing
countries
% change on previous year
15
10
5
0
1970
1975
1980
1985
1990
1995
2000
Sources: IMF World Economic Outlook September 2006 database
2005
The ‘Great
Moderation’ in
inflation
. . . and good for China and India
Share of world output
Ten largest economies, 2005
%, PPP b asis
% of world GDP, PPP b asis
25
India
United States
China
China
20
Japan
India
15
Germany
United Kingdom
10
France
Italy
5
Brazil
Russia
0
1980
1985
1990
1995
2000
2005
Sources: IMF World Economic Outlook September 2006 database
0
5
10
15
20
25
. . . and good for China and India
Share of world output
Ten largest
2005and
Byeconomies,
2005 China
%, PPP b asis
% of world GDP, PPP b asis
25
India accounted for
about 21% of world
United States
GDP at PPP rates
India
China
China
20
Japan
India
15
Germany
United Kingdom
10
France
Italy
5
Brazil
Russia
0
1980
1985
1990
1995
2000
2005
Sources: IMF World Economic Outlook September 2006 database
0
5
10
15
20
25
. . . and good for China and India
Share of world output
Ten largest economies, 2005
%, PPP b asis
% of world GDP, PPP b asis
On
India
the same basis,
China China was the
world’s 2nd largest
economy, and India
in 4th place
25
20
15
United States
China
Japan
India
Germany
United Kingdom
10
France
Italy
5
Brazil
Russia
0
1980
1985
1990
1995
2000
2005
Sources: IMF World Economic Outlook September 2006 database
0
5
10
15
20
25
Six rich country worries
• Scared by success
• Spooked by security
• Ill at east with inequality
• Troubled by trade
• Rattled by resource security
• Exercised by the environment
Remaking the world economy
Share of world output
%, PPP b asis
60
50
India
China
40
30
20
10
0
1300 1500 1820 1913 1950 1973 2003 2030
Sources: Angus Maddison (2006)
Remaking the world economy
Share of world output
%, PPP b asis
60
50
India
China
40
30
20
10
0
1300 1500 1820 1913 1950 1973 2003 2030
Sources: Angus Maddison (2006)
Before the start of
C19th
globalisation, China
and India may have
accounted for half
of world GDP
Remaking the world economy
Share of world output
%, PPP b asis
60
50
India
China
Before the start of
C19th
globalisation, China
and India may have
accounted for half
of world GDP
40
30
On fairly
conservative
assumptions, share
back up to one third
by 2030
20
10
0
1300 1500 1820 1913 1950 1973 2003 2030
Sources: Angus Maddison (2006)
“Economists argue that in economic competition
what counts are absolute not relative gains; to
economists this is a self-evident truth.
It is
however, self-evident to almost no one but
economists . . . they are blind to the fact that
economic activity is a source of power as well as
well-being.
It is, indeed, probably the most
important source of power, and . . . will be
increasingly important in determining the primacy
and subordination of states.”
“Why international primacy matters”
Samuel Huntington (1993)
Good for global inequality . . .
Global Gini index
Index from 0 to 1: 0 indicates perfect equality, 1 perfect inequality
0.68
0.64
0.60
Bourguignon-Morrisson
Sala-i-Martin
0.56
0.52
0.48
1820
1870
1910
1950
1970
1980
1990
Sources: Bourguignon and Morrison (2002) and Sala-i-Martin (2006)
2000
Good for global inequality . . .
Global Gini index
Index from 0 to 1: 0 indicates perfect equality, 1 perfect inequality
0.68
0.64
0.60
Bourguignon-Morrisson
Sala-i-Martin
0.56
Global inequality
may have peaked
around 1980
0.52
0.48
1820
1870
1910
1950
1970
1980
1990
Sources: Bourguignon and Morrison (2002) and Sala-i-Martin (2006)
2000
. . . but not for national inequality
US Gini Index
Index from 0 to 1: 0 indicates perfect equality, 1 perfect inequality
0.48
0.46
0.44
0.42
0.40
0.38
1970
Sources: US Census Bureau
1975
1980
1985
1990
1995
2000
2005
. . . but not for national inequality
US Gini Index
Index from 0 to 1: 0 indicates perfect equality, 1 perfect inequality
0.48
0.46
0.44
2005 Gini index
highest yet recorded
0.42
0.40
0.38
1970
Sources: US Census Bureau
1975
1980
1985
1990
1995
2000
2005
Does labour lose out?
Ten largest labour forces, 2005
Labour share of US national income
Millions
Index, 1992 = 100, nonfarm b usiness sector
106
China
105
India
104
United States
103
Indonesia
102
Brazil
101
Russian Federation
100
Japan
99
Bangladesh
98
Pakistan
97
Nigeria
96
0
200
400
600
800
1000
1980 I
Sources: World Bank and US Bureau of Labor Statistics
1985 I
1990 I
1995 I
2000 I
2005 I
Does labour lose out?
Ten largest labour forces, 2005
Labour share of US national income
Millions
Index, 1992 = 100, nonfarm b usiness sector
106
China
105
India
104
United States
103
Indonesia
102
In 2005, China
101
accounted for about
100
25½ % of the
potential global99
labour force, and98
97
India another 14½%
Brazil
Russian Federation
Japan
Bangladesh
Pakistan
Nigeria
96
0
200
400
600
800
1000
1980 I
Sources: World Bank and US Bureau of Labor Statistics
1985 I
1990 I
1995 I
2000 I
2005 I
Reshaping world trade
India 's sha re of w orld 'othe r' com m e rcia l se rvice s
e x ports
China's share of world merchandise trade
% of total
8
% of total
4.0
Exports
3.5
Imports
7
6
3.0
5
2.5
4
2.0
3
1.5
2
1.0
1
0.5
0
0.0
1980
1985
1990
1995
2000
Sources: WTO International trade statistics
2005
1980
1985
1990
1995
2000
2005
Reshaping world trade
India 's sha re of w orld 'othe r' com m e rcia l se rvice s
e x ports
China's share of world merchandise trade
% of total
8
% of total
4.0
China now the
world’s third largest
trading nation,
accounting for 7%
of exports, 6% of
imports
Exports
3.5
Imports
7
6
3.0
5
2.5
4
2.0
3
1.5
2
1.0
1
0.5
0
0.0
1980
1985
1990
1995
2000
Sources: WTO International trade statistics
2005
1980
1985
1990
1995
2000
2005
Reshaping world trade
India 's sha re of w orld 'othe r' com m e rcia l se rvice s
e x ports
China's share of world merchandise trade
% of total
8
% of total
4.0
India’s share of
‘other’ commercial
services exports up
from 0.5% in 1996
to almost 4% by
2005
Exports
3.5
Imports
7
6
5
4
3.0
2.5
2.0
3
1.5
2
1.0
1
0.5
0
0.0
1980
1985
1990
1995
2000
Sources: WTO International trade statistics
2005
1980
1985
1990
1995
2000
2005
US-China trade tensions
US-China bilateral trade balance
US$ b n
50
0
-50
-100
-150
-200
-250
1980
1985
Sources: US Department of Commerce
1990
1995
2000
2005
US-China trade tensions
US-China bilateral trade balance
US$ b n
50
0
-50
-100
2006 bilateral deficit
of US$232.5 billion
-150
-200
-250
1980
1985
Sources: US Department of Commerce
1990
1995
2000
2005
Resource hunger
China's contribution to global consumption growth
Share of world oil consumption
% share, selected commodities 2002-2005
% of total
90
12
China
75
India
9
60
45
6
30
15
3
ic
ke
l
N
Ti
n
oa
l
C
St
ee
l
op
pe
r
C
O
il
Al
um
in
iu
m
0
0
1980
Sources: BP Handbook of Energy Statistics 2006, Various
1985
1990
1995
2000
2005
Resource hunger
China's contribution to global consumption growth
Share of world oil consumption
% share, selected commodities 2002-2005
% of total
90
12
China is now the
world’s largest
consumer of the
China major
India metals and
the second largest
consumer of
energy
75
9
60
45
6
30
15
3
ic
ke
l
N
Ti
n
oa
l
C
St
ee
l
op
pe
r
C
O
il
Al
um
in
iu
m
0
0
1980
Sources: BP Handbook of Energy Statistics 2006, Various
1985
1990
1995
2000
2005
Resource hunger
China's contribution to global consumption growth
Share of world oil consumption
% share, selected commodities 2002-2005
% of total
90
12
China is now the
world’s largest
consumer of the
China major
India metals and
the second largest
consumer of
energy
75
9
60
45
6
30
15
3
ic
ke
l
N
Ti
n
oa
l
C
St
ee
l
op
pe
r
C
O
il
Al
um
in
iu
m
0
0
1980
Sources: BP Handbook of Energy Statistics 2006, Various
More than 30% of growth
in oil consumption; more
than 45% growth in
aluminium, copper and
steel consumption; threequarters of coal, tin and
nickel consumption growth
1985
1990
1995
2000
2005
Environmental strains
Share of world CO2 emissions
Ten largest CO2 emitters, 2004
%
% of world total
25
India
United States
China
China
20
Russia
Japan
15
India
Germany
10
Canada
United Kingdom
5
South Korea
Italy
0
1980
1985
1990
1995
2000
2004
Sources: EIA International Energy Outlook
0
5
10
15
20
25
Environmental strains
Share of world CO2 emissions
Ten largest CO2 emitters, 2004
%
% of world total
25
India
United States
China
China
20
Russia
Japan
15
India
Germany
10
Canada
United Kingdom
5
South Korea
Italy
0
1980
1985
1990
1995
2000
2004
Sources: EIA International Energy Outlook
0
5
Share of CO2
emissions in 2004:
21.5%. But share
of cumulative
emissions much
10
lower15(less20than25
10%)
Six developments to track
• Renewal of TPA in the US . . .
• . . . and the future of the Doha Round
• May’s SED in Washington
• China’s new economic model?
• IMF (quota) reform
• ‘Greening’ globalisation
Second thoughts on globalisation
Mark Thirlwell
4 April 2007